Deepwater Oil Spill: Setback for BP in Compensation Bid

BP has suffered a major setback after a US court ruled that its sub-contractors could not be involved in paying compensation over the Gulf of Mexico oil spill.

District Judge Carl Barbier told BP that Transocean and Halliburton were protected by their contract with the oil giant from having to pay pollution claims although they are still eligible for punitive damages and civil penalties arising out of the Deepwater Horizon oil spill off the Louisiana coast in 2010. "Transocean cannot avoid its responsibility for this accident," the judge said.

The decision has come as a breather for Transocean, but the sanctions on the driller could still cost it a sizeable chunk of money amounting to billions of dollars.

There are conflicting reactions to the court's observations from the part of BP and the contractors. "The ruling makes clear that contractors will be held accountable for their actions under the law. While all official investigations have concluded that Transocean played a causal role in the accident, the contractor has long contended it is fully indemnified by BP for the liabilities resulting from the oil spill. The Court rejected this view," the company said in a statement.

"As we have said from the beginning, Transocean cannot avoid its responsibility for this accident," BP added.

Transocean spokesman Lou Colasuonno said in an email sent to Reuters: "This confirms that BP is responsible for all economic damages caused by the oil that leaked from its Macondo well, and discredits BP's ongoing attempts to evade both its contractual and financial obligations."